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Prosecuting BP

University of Michigan law professor David Uhlmann, former chief of the environmental crimes section in the Department of Justice, had an op-ed in the NYT discussing the potential prosecution of British Petroleum and its executives for the Deepwater Horizon blowout and spill. He writes:

If the spill had resulted from a hurricane or lightning strike, or if it had been an unavoidable accident — an equipment failure that happened without warning — it wouldn’t warrant criminal prosecution. Increasingly, however, it appears that there was negligence or worse in the events leading to the explosion of the rig.

News reports have described warning signs that went unheeded and deviations from standard industry practice: Gas was seeping into the well. The blowout preventer was leaking. Concerns were raised about the well casing. There were signs of trouble with the cement in the well. Mud circulation was limited. A final concrete plug was not properly installed. And when disaster struck, the blowout preventer failed.

Prosecutors must examine all witness statements, internal documents and any physical evidence that remains after the explosion. But if the news articles are accurate, the Justice Department should bring criminal charges against BP, and possibly Transocean and Halliburton, for violations of the Clean Water Act, the Migratory Bird Treaty Act and the Refuse Act — the same charges brought in the Exxon Valdez case. Exxon ultimately paid a criminal fine of $125 million, the largest ever for an environmental crime. . . .

No one thinks BP, Transocean or Halliburton intended to spill oil into the gulf. But given good evidence, the government could argue that the companies cut corners or deviated so much from standard industry practice that they knew a blowout could happen. Or, the government could argue that, even if the initial gusher involved only negligence (a misdemeanor under the Clean Water Act) each additional day represents a knowing violation. Both approaches are untested, because there have been so few oil spill cases — but the gulf disaster warrants trying aggressive strategies.

Even without a criminal prosecution, BP will pay dearly for its mismanagement and lax practices. The federal Oil Pollution Act may cap BP’s liability for economic damages at $75 million, but that will barely scratch the surface of the moneys BP will pay. According to company executives, BP has already spent over $1 billion on cleanup and recovery efforts, and some estimate the cleanup tag alone could reach $14 billion. On top of that, it share price has taken a tumble, and over 100 lawsuits have been filed against it. BP was irresponsible (as were Halliburton and Transocean) and they will pay, as they should.

BP’s lax operations and corporate culture contributed to the series of events that caused the spill. (See, e.g., this WSJ article.) What’s ironic about this is it was not so long ago that environmentalists were lauding the oil giant for its “progressive” approach to environmental issues (and substantial financial contributions to environmental causes). One CEO even sought to rebrand BP as “Beyond Petroleum” to reflect its commitment to alternative energy sources. Yet it’s becoming increasingly clear that BP’s commitment to the environment was just window dressing. The Gulf spill is hardly the first example of BP’s lax oversight and negligent operations. Going Green was good PR, not meaningful commitment that should influence its operations so as to enhance worker safety and protect the environment. how ironic that BP’s actual performance pales in comparison with competitors like ExxonMobil. Those companies most aggressive in seeking to burnish their green credentials, and pronounce their progressive commitment, are often those with the worst records on the ground.